Exhibit 10.1





 


SECURITIES
PURCHASE AGREEMENT


 


This
Securities Purchase Agreement (this “Agreement”) is dated as of July 5, 2018, between MassRoots, Inc. a Delaware
corporation (the “Company”), and each purchaser identified on the signature pages hereto (each, including its
successors and assigns, a “Purchaser” and collectively, the “Purchasers”).


 


WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act of 1933,
as amended (the “Securities Act”), and Rule 506 promulgated thereunder, the Company desires to issue and sell
to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company
as more fully described in this Agreement.


 


NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:


 


ARTICLE
I.


DEFINITIONS


 


1.1  Definitions.
In addition to the terms defined elsewhere in this Agreement: (a)


capitalized
terms that are not otherwise defined herein have the meanings given to such terms in the Notes (as defined herein), and (b) the
following terms have the meanings set forth in this Section 1.1:


 


“Acquiring
Person” shall have the meaning ascribed to such term in Section 4.7.


 


“Action”
shall have the meaning ascribed to such term in Section 3.1(j).


 


“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.


 


“Board
of Directors” means the board of directors of the Company.


 


“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or
any day on which banking institutions in the State of New York are authorized or required by law or other governmental action
to close.


 


“Closing
Date” means the Trading Day(s) on which all of the Transaction Documents have been executed and delivered by the applicable
parties thereto in connection with a Closing, and all conditions precedent to (i) the Purchasers’ obligations to pay the
Subscription Amount as to such Closing and (ii) the Company’s obligations to deliver the Securities as to such Closing,
in each case, have been satisfied or waived.


 






     


     


    




 


“Closing”
means the closing of the purchase and sale of the Securities pursuant to Section 2.2.


 


“Closing
Statement” means the Closing Statement in the form on Annex A attached hereto.


 


“Commission”
means the United States Securities and Exchange Commission.


 


“Common
Stock” means the common stock of the Company, par value $0.001 per share, and any other class of securities into which
such securities may hereafter be reclassified or changed.


 


“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to
acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument
that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive,
Common Stock.


 


“Conversion
Price” shall have the meaning ascribed to such term in the Notes.


 


“Disclosure
Schedules” shall have the meaning ascribed to such term in Section 3.1.


 


“Effective
Date” means the earliest of the date that (a) all of the Securities have been sold pursuant to Rule 144 or may be sold
pursuant to Rule 144 without the requirement for the Company to be in compliance with the current public information required
under Rule 144 and without volume or manner-of-sale restrictions or (b) following the one (1) year anniversary of the Closing
Date provided that a holder of Securities is not an Affiliate of the Company, all of the Securities may be sold pursuant to an
exemption from registration under Sections 4(a)(1) or 4(a)(7) of the Securities Act without volume or manner-of-sale restrictions
and Company counsel has delivered to such holders a standing written unqualified opinion that resales may then be made by such
holders of the Securities pursuant to such exemption which opinion shall be in form and substance reasonably acceptable to such
holders.


 


“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.


 


“Exempt
Issuance” means the issuance of (a) shares of Common Stock or options to employees, officers, directors, advisors or
consultants of the Company pursuant to any stock or option plan duly adopted for such purpose, by a majority of the non-employee
members of the Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose,
(b) securities upon the exercise or exchange of or conversion of any Securities issued hereunder and/or other securities exercisable
or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of this Agreement, provided
that such securities have not been amended since the date of this Agreement to increase the number of such securities or to decrease
the exercise price, exchange price or conversion price of such securities, and (c) securities issued pursuant to acquisitions
or strategic transactions approved by a majority of the disinterested directors of the Company, provided that any such issuance
shall only be to a Person (or to the equityholders of a Person) which is, itself or through its subsidiaries, an operating company,
but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or
to an entity whose primary business is investing in securities.


 






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“FCPA”
means the Foreign Corrupt Practices Act of 1977, as amended.


 


“GAAP”
shall have the meaning ascribed to such term in Section 3.1(h).


 


“Legend
Removal Date” shall have the meaning ascribed to such term in Section 4.1(c).


 


“Liens”
means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.


 


“Material
Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).


 


“Material
Permits” shall have the meaning ascribed to such term in Section 3.1(m).


 


“Maximum
Rate” shall have the meaning ascribed to such term in Section 5.16.


 


“Notes”
means the Convertible Secured Promissory Notes due, subject to the terms therein, six (6) months from their date of issuance,
issued by the Company to the Purchasers hereunder, in the form of Exhibit A attached hereto.


 


“Participation
Maximum” shall have the meaning ascribed to such term in Section 4.17(a).


 


“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.


 


“Principal
Amount” means, as to each Purchaser, the amounts set forth below such Purchaser’s signature block on the signature
pages hereto next to the heading “Principal Amount,” in United States Dollars.


 


“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial
proceeding, such as a deposition), whether commenced or threatened.


 


“Pro
Rata Portion” shall have the meaning ascribed to such term in 4.17(e).


 


“Public
Information Failure” shall have the meaning ascribed to such term in Section 4.3(b).


 






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“Public
Information Failure Payments” shall have the meaning ascribed to such term in Section 4.3(b).


 


“Purchaser
Party” shall have the meaning ascribed to such term in Section 4.10.


 


“Required
Approvals” shall have the meaning ascribed to such term in Section 3.1(e).


 


“Required
Minimum” means, as of any date, the maximum aggregate number of shares of Common Stock then issued or potentially issuable
in the future pursuant to the Transaction Documents, including any Underlying Shares issuable upon exercise in full of all Warrants
or conversion in full of all Notes (including Underlying Shares issuable as payment of interest on the Notes), ignoring any conversion
or exercise limits set forth therein, and assuming that the Conversion Price is at all times on and after the date of determination
75% of the then Conversion Price on the Trading Day immediately prior to the date of determination.


 


“Rule
144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time
to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.





 


“SEC
Reports” shall have the meaning ascribed to such term in Section 3.1(h).


 


“Securities”
means the Notes, the Warrants, and the Underlying Shares.


 


“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.


 


“Security
Agreement” means the Security Agreement, dated the date hereof, among the Company and the Purchasers, in the form of
Exhibit C, attached hereto.


 


“Security
Documents” shall mean the Security Agreement, and any other documents and filing required thereunder in order to grant
the Purchasers a first priority security interest in the assets of the Company and the Subsidiaries as provided in the Security
Agreement, including all UCC-1 filing receipts.


 


“Sheppard
Mullin” means Sheppard Mullin Richter & Hampton LLP with offices located at 30 Rockefeller Plaza, 39th
Floor, New York, New York 10112.


 


“Short
Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall
not be deemed to include the location and/or reservation of borrowable shares of Common Stock).


 


“Subscription
Amount” means, as to each Purchaser, the aggregate amount to be paid for Notes and Warrants purchased hereunder as specified
below such Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription Amount,”
in United States dollars and in immediately available funds.


 






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“Subsequent
Financing” shall have the meaning ascribed to such term in Section 4.17(a).


 


“Subsequent
Financing Notice” shall have the meaning ascribed to such term in Section 4.17(b)(i).


 


“Subsequent
Financing Notice Period” shall have the meaning ascribed to such term in Section 4.17(b)(i).


 


“Subsidiary”
means any subsidiary of the Company as set forth on Schedule 3.1(a) and shall, where applicable, also include any direct
or indirect subsidiary of the Company formed or acquired after the date hereof.


 


“Trading
Day” means a day on which the principal Trading Market is open for trading.


 


“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on
the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market,
the New York Stock Exchange, the OTCQB or OTCQX (or any successors to any of the foregoing).


 


“Transaction
Documents” means this Agreement, the Notes, the Warrants, the Security Agreement, all exhibits and schedules thereto
and hereto and any other documents or agreements executed in connection with the transactions contemplated hereunder.


 


“Transfer
Agent” means Pacific Stock Transfer Company, the current transfer agent of the Company, with a mailing address of 6725
Via Austi Pkwy, Ste 300, Las Vegas, NV 89119 and a phone number of 720-361-3033, and any successor transfer agent of the Company.


 


“Transfer
Agent Instruction Letter” means the letter from the Company to the Transfer Agent which instructs the Transfer Agent
to issue Underlying Shares pursuant to the Transaction Documents, in the form of Exhibit D attached hereto.


 


“Underlying
Shares” means the shares of Common Stock issued and issuable upon conversion or redemption of the Notes and upon exercise
of the Warrants and issued and issuable in lieu of the cash payment of interest on the Notes in accordance with the terms of the
Notes.


 


Variable
Rate Transaction” shall have the meaning ascribed to such term in Section 4.12.


 


“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then
listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based
on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the Pink Market operated by OTC
Markets, Inc. is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding
date) on the Pink Market, (c) if the Common Stock is not then listed or quoted for trading on the Pink Market (or a similar organization
or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported,
or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected
in good faith by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the
Company, the fees and expenses of which shall be paid by the Company.


 






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“Warrants”
means, collectively, the Common Stock purchase warrants delivered to the Purchasers at the Closing in accordance with Section
2.3(a) hereof, which Warrants shall be exercisable immediately and have a term of exercise equal to four (4) years, in the form
of Exhibit B attached hereto.


 


ARTICLE
II.


PURCHASE
AND SALE


 


2.1  Purchase.
The Purchasers will purchase an aggregate of up to $2,000,000 inSubscription Amount corresponding to an aggregate of up to $2,200,000
in Principal Amount of Notes, on the Closing Date.


 


2.2  Closing.
On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the
execution and delivery of this Agreement by the parties hereto, the Company agrees to sell, and each Purchaser, severally and
not jointly, agrees to purchase, such Purchaser’s Closing Subscription Amount as set forth on the signature page hereto
executed by such Purchaser (an aggregate of up to $2,000,000 in Subscription Amount corresponding to an aggregate of up to
$2,200,00 in Principal Amount of Notes). At the Closing Date, each Purchaser shall deliver to the Company, via wire transfer
or a certified check, immediately available funds equal to such Purchaser’s Subscription Amount as set forth on the
signature page hereto executed by such Purchaser, and the Company shall deliver to each Purchaser its respective Note and a
Warrant, as determined pursuant to Section 2.3(a), and the Company and each Purchaser shall deliver the other items set forth
in Section 2.3 deliverable at the Closing. Upon satisfaction of the covenants and conditions set forth in Sections 2.3 and
2.4, the Closing shall occur at the offices of Sheppard Mullin or such other location as the parties shall mutually
agree.


 


2.3  Deliveries.


 


(a)  On
or prior to the Closing Date (except as noted), the Company shall deliver or cause to be delivered to each Purchaser the following:


 


(i)  
this Agreement duly executed by the Company;


 


(ii)  the
Transfer Agent Instruction Letter duly executed by the Company and the Transfer Agent;


 


(iii)  a
Note with a principal amount equal to such Purchaser’s Principal Amount, registered in the name of such Purchaser;


 






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(iv)  a
Warrant registered in the name of such Purchaser to purchase such number of shares of Common Stock equal to 100% of the Principal
Amount of the Note issuable to such Purchaser at the Closing, divided by the initial exercise price, with an exercise price of
$0.25; and


 


(v)  the
Security Agreement, duly executed by the Company and each Subsidiary, along with all of the Security Documents, duly executed
by the parties thereto.


 


(b)  On
or prior to the applicable Closing Date, each Purchaser shall deliver or cause to be delivered to the Company, as applicable,
the following:


 


(i)  this Agreement duly executed by such Purchaser;


 


(ii)  such
Purchaser’s Subscription Amount, by a certified check or wire transfer to the account specified in writing by the Company;
and


 


(iii)  the
Security Agreement duly executed by such Purchaser.


 


2.4  Closing
Conditions.


 


(a)  The
obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met:


 


(i)  the
accuracy in all material respects on the Closing Date of the representations and warranties of the Purchasers contained herein
(unless as of a specific date therein in which case they shall be accurate as of such date);


 


(ii)  all
obligations, covenants and agreements of each Purchaser required to be performed at or prior to the Closing Date shall have been
performed; and


 


(iii)  the
delivery by each Purchaser of the items set forth in Section 2.3(b) of this Agreement.











 


(b)  The
respective obligations of the Purchasers hereunder in connection with the Closing are subject to the following conditions being
met:


 


(i)  the
accuracy in all material respects when made and on the Closing Date of the representations and warranties of the Company contained
herein (unless as of a specific date therein);


 


(ii)  all
obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been
performed;


 


(iii)  the
delivery by the Company of the items set forth in Section 2.3(a) of this Agreement;


 






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(iv)  there
is no existing Event of Default (as defined in the Notes) and no existing event which, with the passage of time or the giving
of notice, would constitute an Event of Default;


 


(v)  there
shall have been no Material Adverse Effect with respect to the Company since the date hereof;


 


(vi)  trading
in the Common Stock shall not have been suspended by the Commission or the Company’s principal Trading Market and, at any
time prior to the Closing Date, trading in securities generally as reported by Bloomberg L.P. shall not have been suspended or
limited, or minimum prices shall not have been established on securities whose trades are reported by such service, or on any
Trading Market, nor shall a banking moratorium have been declared either by the United States or New York State authorities nor
shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity of such
magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment
of such Purchaser, makes it impracticable or inadvisable to purchase the Securities at the applicable Closing;


 


(vii)  the
Purchasers’ legal fees not to exceed $7,500 have been paid by the Company, which may be withheld from the Subscription Amounts
; and


 


(viii)  the
Company and the Transfer Agent have executed a reservation letter in the form and substance acceptable to the Purchasers in their
sole discretion.


 


ARTICLE
III.


REPRESENTATIONS
AND WARRANTIES


 


3.1  Representations
and Warranties of the Company. Except as set forth in the disclosure schedules (the “Disclosure Schedules"), which
Disclosure Schedules shall be deemed a part hereof and shall qualify any representation or otherwise made herein to the extent
of the disclosure contained in the corresponding section of the Disclosure Schedules, the Company hereby makes the following representations
and warranties to each Purchaser:


 


(a)  Subsidiaries.
Except as set forth in Schedule 3.1(a), the Company has no subsidiaries.


 


(b)  Organization
and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power
and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company
nor any Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation,
bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business
and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted
or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity
or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business,
prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse
effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction
Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in
any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.


 






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(c)  Authorization;
Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder
and thereunder. The execution and delivery of this Agreement and each of the other Transaction Documents by the Company and the
consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the
part of the Company and no further action is required by the Company, the Board of Directors or the Company’s stockholders
in connection herewith or therewith other than in connection with the Required Approvals. This Agreement and each other Transaction
Document to which it is a party has been (or upon delivery will have been) duly executed by the Company and, when delivered in
accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii)
as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii)
insofar as indemnification and contribution provisions may be limited by applicable law.


 


(d)  No
Conflicts. The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to
which it is a party, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby
and thereby do not and will not: (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate
or articles of incorporation, bylaws or other organizational or charter documents, (ii) conflict with, or constitute a default
(or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon
any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration
or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing
a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which
any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict
with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court
or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations),
or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii)
and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.


 






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(e)  Filings,
Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice
to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other
Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i)
the filings required pursuant to Section 4.6 of this Agreement, (ii) the notice and/or application(s) to each applicable Trading
Market for the issuance and sale of the Securities and the listing of the Underlying Shares for trading thereon in the time and
manner required thereby and (iii) the filing of Form D with the Commission and such filings as are required to be made under applicable
state securities laws (collectively, the “Required Approvals”).


 


(f)  Issuance
of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other
than restrictions on transfer provided for in the Transaction Documents. The Underlying Shares, when issued in accordance with
the terms of the Transaction Documents, will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed
by the Company other than restrictions on transfer provided for in the Transaction Documents.


 


(g)  Capitalization.
The capitalization of the Company is as set forth on Schedule 3.1(g), which Schedule 3.1(g) shall also include the
number of shares of Common Stock owned beneficially, and of record, by Affiliates of the Company as of the date hereof. No Person
has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents, except as set forth on Schedule 3.1(g). Except as set forth on Schedule 3.1(g),
there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating
to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to
subscribe for or acquire any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company
or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents. Except as set
forth on Schedule 3.1(g), the issuance and sale of the Securities will not obligate the Company to issue shares of Common Stock
or other securities to any Person (other than the Purchasers) and will not result in a right of any holder of Company securities
to adjust the exercise, conversion, exchange or reset price under any of such securities. All of the outstanding shares of capital
stock of the Company are duly authorized, validly issued, fully paid and nonassessable, have been issued in compliance with all
federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar
rights to subscribe for or purchase securities. No further approval or authorization of any stockholder, the Board of Directors
or others is required for the issuance and sale of the Securities. There are no stockholders agreements, voting agreements or
other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge
of the Company, between or among any of the Company’s stockholders.


 






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(h)  SEC
Reports; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required
to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
for the two (2) years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file
such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being
collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of
such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates,
the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable,
and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which
they were made, not misleading. The Company has never been an issuer subject to Rule 144(i) under the Securities Act. The financial
statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements
and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements
have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during
the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes
thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all
material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and
the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.


 


(i)  Material
Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements included
within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed prior to the date hereof: (i) there
has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse
Effect, (ii) the Company has not altered its method of accounting, (iii) the Company has not incurred any liabilities (contingent
or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past
practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed
in filings made with the Commission, (iv) the Company has not declared or made any dividend or distribution of cash or other property
to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v)
the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock
option plans. The Company does not have pending before the Commission any request for confidential treatment of information. Except
for the issuance of the Securities contemplated by this Agreement or as set forth on Schedule 3.1(i), to the best of the
Company’s knowledge, no event, liability, fact, circumstance, occurrence or development has occurred or exists or is reasonably
expected to occur or exist with respect to the Company or its Subsidiaries or their respective businesses, properties, operations,
assets or financial condition, that would be required to be disclosed by the Company under applicable securities laws at the time
this representation is made or deemed made that has not been publicly disclosed at least one (1) Trading Day prior to the date
that this representation is made.


 






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(j)  Litigation.
There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator,
governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”)
which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the
Securities or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse
Effect. Neither the Company nor any Subsidiary (or affiliated issuer), nor any director or officer thereof or other person or
entity referred to in Rule 506(d) of the Securities Act, is or has been the subject of any Action involving a claim of violation
of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the
knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any
current or former director or officer of the Company. The Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.


 


(k)  Labor
Relations. No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of
the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its Subsidiaries’
employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither
the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries
believe that their relationships with their employees are good. To the knowledge of the Company, no executive officer of the Company
or any Subsidiary, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality,
disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive
covenant in favor of any third party, and the continued employment of each such executive officer does not subject the Company
or any of its Subsidiaries to any liability with respect to any of the foregoing matters. To the best of the Company’s knowledge,
the Company and its Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations relating
to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be
in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.


 






    	 	- 12 -	 



     


    




 


(l)  Compliance.
Neither the Company nor any Subsidiary, to the best of the Company’s knowledge: (i) is in default under or in violation
of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by
the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under
or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party
or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation
of any judgment, decree or order of any court, arbitrator or other governmental authority or (iii) is or has been in violation
of any statute, rule, ordinance or regulation of any governmental authority, including without limitation all foreign, federal,
state and local laws relating to taxes, environmental protection, occupational health and safety, product quality and safety and
employment and labor matters, except in each case as could not have or reasonably be expected to result in a Material Adverse
Effect, except for laws related to the prohibition of cannabis.


 


(m)  Regulatory
Permits. To the best of the Company’s knowledge, the Company and the Subsidiaries possess all certificates, authorizations
and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective
businesses as described in the SEC Reports, except where the failure to possess such permits could not reasonably be expected
to result in a Material Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has
received any notice of proceedings relating to the revocation or modification of any Material Permit.


 


(n)  Title
to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them
and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries,
in each case free and clear of all Liens, except for (i) Liens as do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and (ii) Liens
for the payment of federal, state or other taxes, for which appropriate reserves have been made therefor in accordance with GAAP
and, the payment of which is neither delinquent nor subject to penalties. To the best of the Company’s knowledge, any real
property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable
leases with which the Company and the Subsidiaries are in compliance.


 


(o)  Transactions
With Affiliates and Employees. Except as set forth in the SEC Reports, none of the officers or directors of the Company or
any Subsidiary and, to the knowledge of the Company, none of the employees of the Company or any Subsidiary is presently a party
to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including
any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or
personal property to or from providing for the borrowing of money from or lending of money to, or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director, trustee, stockholder, member or partner, in each case
in excess of $120,000 other than for: (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses
incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock option
plan of the Company.


 






    	 	- 13 -	 



     


    




 


(p)  Sarbanes-Oxley;
Internal Accounting Controls. Except as set forth in the SEC Reports, to the best of the Company’s knowledge, the Company
and the Subsidiaries are in compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective
as of the date hereof, and any and all applicable rules and regulations promulgated by the Commission thereunder that are effective
as of the date hereof and as of the applicable Closing Date.


 


(q)  Certain
Fees. Other than as set forth on Schedule 3.1(q), no brokerage or finder’s fees or commissions are or will be
payable by the Company or any Subsidiaries to any broker, financial advisor or consultant, finder, placement agent, investment
banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. The Purchasers shall
have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a
type contemplated in this Section that may be due in connection with the transactions contemplated by the Transaction Documents.


 


(r)  Private
Placement. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, no registration
under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchasers as contemplated
hereby. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Trading Market.


 


(s)  Investment
Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will
not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as
amended. The Company shall conduct its business in a manner so that it will not become an “investment company” subject
to registration under the Investment Company Act of 1940, as amended.


 


(t)  Registration
Rights. Except as set forth in Schedule 3.1(t), no Person has any right to cause the Company to effect the registration
under the Securities Act of any securities of the Company or any Subsidiaries.


 


(u)  Listing
and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(g) of the Exchange Act, and the Company
has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the
Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating
such registration. The Company has not, in the twelve (12) months preceding the date hereof, received notice from any Trading
Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the
listing or maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not in the
foreseeable future continue to be, in compliance with all such listing and maintenance requirements.


 






    	 	- 14 -	 



     


    




 


(v)  Application
of Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Company’s Second Amended and Restated Certificate of Incorporation (the
“Certificate of Incorporation”) (or similar charter documents) or the laws of its state of incorporation that is or
could become applicable to the Purchasers as a result of the Purchasers and the Company fulfilling their obligations or exercising
their rights under the Transaction Documents, including without limitation as a result of the Company’s issuance of the
Securities and the Purchasers’ ownership of the Securities.


 


(w)  Disclosure.
To the best of the Company’s knowledge, except with respect to the material terms and conditions of the transactions contemplated
by the Transaction Documents, neither the Company nor any other Person acting on its behalf has provided any of the Purchasers
or their agents or counsel with any information that it believes constitutes or might constitute material, non-public information.
The Company understands and confirms that the Purchasers will rely on the foregoing representation in effecting transactions in
securities of the Company. All of the disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company
and its Subsidiaries, their respective businesses and the transactions contemplated hereby, including the Disclosure Schedules
to this Agreement, is true and correct and does not contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.
The press releases disseminated by the Company during the twelve (12) months preceding the date of this Agreement taken as a whole
do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under which they were made and when made, not misleading.
The Company acknowledges and agrees that no Purchaser makes or has made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof.


 


(x)  No
Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2,
neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made
any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering
of the Securities to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would require
the registration of any such securities under the Securities Act, or (ii) any applicable shareholder approval provisions of any
Trading Market on which any of the securities of the Company are listed or designated.


 






    	 	- 15 -	 



     


    




 


(y)  Intentionally
Omitted.


 


(z)  Tax
Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result
in a Material Adverse Effect, the Company and its Subsidiaries each (i) has made or filed all United States federal, state and
local income and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which
it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined
to be due on such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for the
payment of all material taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There
are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of
the Company or of any Subsidiary know of no basis for any such claim.


 


(aa)  No
General Solicitation. Neither the Company nor any person acting on behalf of the Company has offered or sold any of the Securities
by any form of general solicitation or general advertising. The Company has offered the Securities for sale only to the Purchasers
and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.


 


(bb)  Foreign
Corrupt Practices. Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary, any agent
or other person acting on behalf of the Company or any Subsidiary, has: (i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any
unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns
from corporate funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made by any person
acting on its behalf of which the Company is aware) which is in violation of law or (iv) violated in any material respect any
provision of FCPA.


 


(cc)  Accountants.
The Company’s accounting firm is set forth on Schedule 3.1(cc) of the Disclosure Schedules. To the knowledge and
belief of the Company, such accounting firm: (i) is a registered public accounting firm as required by the Exchange Act and (ii)
expressed its opinion with respect to the financial statements included in the Company’s Annual Report for the fiscal year
ending December 31, 2017.


 


(dd)  No
Disagreements with Accountants and Lawyers. There are no disagreements of any kind presently existing, or reasonably anticipated
by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the Company and
the Company is current with respect to any fees owed to its accountants which could affect the Company’s ability to perform
any of its obligations under any of the Transaction Documents.


 


(ee)  Acknowledgment
Regarding Purchasers’ Purchase of Securities. The Company acknowledges and agrees that each of the Purchasers is acting
solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated
thereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given
by any Purchaser or any of their respective representatives or agents in connection with the Transaction Documents and the transactions
contemplated thereby is merely incidental to the Purchasers’ purchase of the Securities. The Company further represents
to each Purchaser that the Company’s decision to enter into this Agreement and the other Transaction Documents has been
based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.


 






    	 	- 16 -	 



     


    




 


(ff)  Seniority.
Except as set forth on Schedule 3.1(ff), as of each Closing Date, no indebtedness or other claim against the Company is
senior to the Notes in right of payment, whether with respect to interest or upon liquidation or dissolution, or otherwise, other
than indebtedness secured by purchase money security interests (which is senior only as to underlying assets covered thereby)
and capital lease obligations (which is senior only as to the property covered thereby).


 


(gg)  Regulation
M Compliance.  The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly,
any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting
purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase
any other securities of the Company.


 


(hh)  Stock
Option Plans. Each stock option granted by the Company under the Company’s stock option plan was granted (i) in accordance
with the terms of the Company’s stock option plan and (ii) with an exercise price at least equal to the fair market value
of the Common Stock on the date such stock option would be considered granted under GAAP and applicable law. No stock option granted
under the Company’s stock option plan has been backdated. The Company has not knowingly granted, and there is no and has
been no Company policy or practice to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of
stock options with, the release or other public announcement of material information regarding the Company or its Subsidiaries
or their financial results or prospects.


 


(ii)  Office
of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company's knowledge, any director, officer,
agent, employee or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctions administered by the Office
of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).


 


(jj)  U.S.
Real Property Holding Corporation. The Company is not and has never been a U.S. real property holding corporation within the
meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon Purchaser’s
request.


 


(kk)  Bank
Holding Company Act. Neither the Company nor any of its Subsidiaries or Affiliates is subject to the Bank Holding Company
Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System
(the “Federal Reserve”). Neither the Company nor any of its Subsidiaries or Affiliates owns or controls, directly
or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent (25%)
or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither
the Company nor any of its Subsidiaries or Affiliates exercises a controlling influence over the management or policies of a bank
or any entity that is subject to the BHCA and to regulation by the Federal Reserve.


 






    	 	- 17 -	 



     


    




 


(ll)  Money
Laundering. To the best of the Company’s knowledge, the operations of the Company and its Subsidiaries are and have
been conducted at all times in compliance with applicable financial record-keeping and reporting requirements of the Currency
and Foreign Transactions Reporting Act of 1970, as amended, applicable money laundering statutes and applicable rules and regulations
thereunder (collectively, the “Money Laundering Laws”), and no action, suit or proceeding by or before any
court or governmental agency, authority or body or any arbitrator involving the Company or any Subsidiary with respect to the
Money Laundering Laws is pending or, to the knowledge of the Company or any Subsidiary, threatened.


 


(mm)  No
Disqualification Events. With respect to the Securities to be offered and sold hereunder in reliance on Rule 506 under the
Securities Act, none of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other officer
of the Company participating in the offering hereunder, any beneficial owner of 20% or more of the Company’s outstanding
voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under
the Securities Act) connected with the Company in any capacity at the time of sale (each, an "Issuer Covered Person"
and, together, "Issuer Covered Persons") is subject to any of the "Bad Actor" disqualifications described
in Rule 506(d)(1)(i) to (viii) under the Securities Act (a "Disqualification Event"), except for a Disqualification
Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether any Issuer Covered Person
is subject to a Disqualification Event. The Company has complied, to the extent applicable, with its disclosure obligations under
Rule 506(e), and has furnished to the Purchasers a copy of any disclosures provided thereunder.


 


3.2  Representations
and Warranties of the Purchasers. Each Purchaser, for itself and for no other Purchaser, hereby represents and warrants as
of the date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein):


 


(a)  Organization;
Authority. Such Purchaser is either an individual or an entity duly incorporated or formed, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability
company or similar power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents
and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and
performance by such Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary
corporate, partnership, limited liability company or similar action, as applicable, on the part of such Purchaser. Each Transaction
Document to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with
the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance
with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by
laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable law.


 






    	 	- 18 -	 



     


    




 


(b)  Own
Account. Such Purchaser understands that the Securities are “restricted securities” and have not been registered
under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its own account
and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act
or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities
Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons
to distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities
law (this representation and warranty not limiting such Purchaser’s right to sell the Securities in compliance with applicable
federal and state securities laws). Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business.


 


(c)  Purchaser
Status. At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, and on each date on
which it exercises any Warrants or converts any Notes it will be an “accredited investor” as defined in Rule 501under
the Securities Act.


 


(d)  Experience
of Such Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment
in the Securities, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk
of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.


 


(e)  General
Solicitation. Such Purchaser is not purchasing the Securities as a result of any advertisement, article, notice or other communication
regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented
at any seminar or any other general solicitation or general advertisement.


 


(f)  Certain
Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, such Purchaser has not
directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, executed
any purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of the time
that such Purchaser first received a term sheet (written or oral) from the Company or any other Person representing the Company
setting forth the material terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof.
Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio
managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the
investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the representation
set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment
decision to purchase the Securities covered by this Agreement. Other than to other Persons party to this Agreement, such Purchaser
has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence
and terms of this transaction).


 






    	 	- 19 -	 



     


    




 


Except
where such representations conflict, the Company acknowledges and agrees that the representations contained in Section 3.2 shall
not modify, amend or affect such Purchaser’s right to rely on the Company’s representations and warranties contained
in this Agreement or any representations and warranties contained in any other Transaction Document or any other document or instrument
executed and/or delivered in connection with this Agreement or the consummation of the transaction contemplated hereby.


 


ARTICLE
IV.


OTHER
AGREEMENTS OF THE PARTIES


 


4.1  Transfer
Restrictions.


 


(a)  The
Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Securities
other than pursuant to an effective registration statement, Rule 144 or Sections 4(a)(1) or 4(a)(7) of the Securities Act, to
the Company or to an Affiliate of a Purchaser or in connection with a pledge as contemplated in Section 4.1(b), the Company may
require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable
to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred Securities under the Securities Act. As a condition of transfer, any
such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights and obligations of
a Purchaser under this Agreement.


 


(b)  The
Purchasers agree to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Securities in the following
form:


 


[NEITHER]
THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS [EXERCISABLE] [CONVERTIBLE]] HAS [NOT] BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS
EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE
TO THE COMPANY. THIS SECURITY [AND THE SECURITIES ISSUABLE UPON [EXERCISE] [CONVERSION] OF THIS SECURITY] MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED
INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.


 






    	 	- 20 -	 



     


    




 


The
Company acknowledges and agrees that a Purchaser may, from time to time pledge, pursuant to a bona fide margin agreement with
a registered broker-dealer or grant, a security interest in some or all of the Securities to a financial institution that is an
“accredited investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions
of this Agreement and, if required under the terms of such arrangement, such Purchaser may transfer pledged or secured Securities
to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval of the Company and no legal opinion
of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith. Further, no notice shall
be required of such pledge. At the Purchaser’s expense, the Company will execute and deliver such reasonable documentation
as a pledgee or secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities.


 


(c)  Certificates
evidencing the Underlying Shares shall not contain any legend (including the legend set forth in Section 4.1(b) hereof): (i) following
any sale of such Underlying Shares pursuant to Rule 144, or (ii) if such legend is not required under applicable requirements
of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission). The Company
shall cause counsel to issue a legal opinion to be delivered to the Transfer Agent, at the cost of the Company, promptly after
any of the events described in (i)-(ii) in the preceding sentence if required by the Transfer Agent to effect the removal of the
legend hereunder (with a copy to the applicable Purchaser and its broker). If all or any portion of a Note is converted (as provided
in a Note) or Warrant is exercised at a time when such legend is not otherwise required under applicable requirements of the Securities
Act (including judicial interpretations and pronouncements issued by the staff of the Commission), then such Underlying Shares
shall be issued free of all legends. The Company agrees that following the Effective Date or at such time as such legend is no
longer required under this Section 4.1(c), it will, no later than three (3) Trading Days following the delivery by a Purchaser
to the Company or the Transfer Agent of a certificate representing Underlying Shares, as applicable, issued with a restrictive
legend (such third (3rd) Trading Day, the “Legend Removal Date”), deliver or cause to be delivered
to such Purchaser a certificate representing such shares that is free from all restrictive and other legends. The Company may
not make any notation on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set
forth in this Section 4. Certificates for Underlying Shares subject to legend removal hereunder shall be transmitted by the Transfer
Agent to the Purchaser by crediting the account of the Purchaser’s prime broker with the Depository Trust Company System
as directed by such Purchaser.


 






    	 	- 21 -	 



     


    




 


(d)  In
addition to such Purchaser’s other available remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated
damages and not as a penalty, for each $1,000 of Underlying Shares (based on the VWAP of the Common Stock on the date such Securities
are submitted to the Transfer Agent) delivered for removal of the restrictive legend and subject to Section 4.1(c), $7 per Trading
Day (increasing to $10 per Trading Day five (5) Trading Days after such damages have begun to accrue) for each Trading Day after
the Legend Removal Date until such certificate is delivered without a legend. Nothing herein shall limit such Purchaser’s
right to pursue actual damages for the Company’s failure to deliver certificates representing any Securities as required
by the Transaction Documents, and such Purchaser shall have the right to pursue all remedies available to it at law or in equity
including, without limitation, a decree of specific performance and/or injunctive relief.


 


4.2  Acknowledgment
of Dilution. The Company acknowledges that the issuance of the Securities may result in dilution of the outstanding
shares of Common Stock, which dilution may be substantial under certain market conditions. The Company further acknowledges
that its obligations under the Transaction Documents, including, without limitation, its obligation to issue the Underlying
Shares pursuant to the Transaction Documents, are unconditional and absolute and not subject to any right of set off,
counterclaim, delay or reduction, regardless of the effect of any such dilution or any claim the Company may have against any
Purchaser and regardless of the dilutive effect that such issuance may have on the ownership of the other stockholders of the
Company.


 


4.3  Furnishing
of Information; Public Information.


 


(a)  Until
the earliest of the time that no Purchaser owns Securities, the Company covenants to maintain the registration of the Common Stock
under Section 12(b) or 12(g) of the Exchange Act and to timely file (or obtain extensions in respect thereof and file within the
applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act even
if the Company is not then subject to the reporting requirements of the Exchange Act.


 


(b)  At
any time during the period commencing from the six (6) month anniversary of the date hereof and ending at such time that all of
the Securities may be sold without the requirement for the Company to be in compliance with Rule 144(c)(1) and otherwise without
restriction or limitation pursuant to Rule 144, if the Company shall fail for any reason to satisfy the current public information
requirement under Rule 144(c) (a “Public Information Failure”), Purchaser may provide written notice to the
Company of the Public Information Failure (“PIF Notice”). If the Public Information Failure is not cured within
two (2) Trading Days following the date that PIF Notice is received by the Company, then, in addition to such Purchaser’s
other available remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated damages and not as a penalty, by
reason of any such delay in or reduction of its ability to sell the Securities, an amount in cash equal to two percent (2.0%)
of the aggregate Subscription Amount of such Purchaser’s Securities on the second (2nd) Trading Day following
the date that PIF Notice is received by the Company and on every thirtieth (30th) day (pro rated for periods totaling
less than thirty (30) days) thereafter until the earlier of (a) the date such Public Information Failure is cured and (b) such
time that such public information is no longer required  for the Purchasers to transfer the Underlying Shares pursuant to
Rule 144.  The payments to which a Purchaser shall be entitled pursuant to this Section 4.3(b) are referred to herein as
“Public Information Failure Payments.”  Public Information Failure Payments shall be paid on the earlier
of (i) the last day of the calendar month during which such Public Information Failure Payments are incurred and (ii) the second
(2nd) Business Day after the event or failure giving rise to the Public Information Failure Payments is cured. 
In the event the Company fails to make Public Information Failure Payments in a timely manner, such Public Information Failure
Payments shall bear interest at the rate of 1.5% per month (prorated for partial months) until paid in full. Nothing herein shall
limit such Purchaser’s right to pursue actual damages for the Public Information Failure, and such Purchaser shall have
the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance
and/or injunctive relief.


 






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4.4  Integration.
The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner
that would require the registration under the Securities Act of the sale of the Securities or that would be integrated with
the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market such that it would
require shareholder approval prior to the closing of such other transaction unless shareholder approval is obtained before
the closing of such subsequent transaction.


 


4.5  Conversion
and Exercise Procedures. Each of the form of Notice of Exercise included in the Warrants and the form of Notice of
Conversion included in the Notes set forth the totality of the procedures required of the Purchasers in order to exercise the
Warrants or convert the Notes. Without limiting the preceding sentences, no ink-original Notice of Exercise or Notice of
Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of
Exercise or Notice of Conversion form be required in order to exercise the Warrants or convert the Note. No additional legal
opinion, other information or instructions shall be required of the Purchasers to exercise their Warrants or convert their
Notes. The Company shall honor exercises of the Warrants and conversions of the Notes and shall deliver Underlying Shares in
accordance with the terms, conditions and time periods set forth in the Transaction Documents.


 


4.6  Securities
Laws Disclosure; Publicity. The Company shall file a Current Report on Form 8-K, including the Transaction Documents as
exhibits thereto, with the Commission by 9:00 a.m. on the next Business Day after the date of this Agreement. From and after
the issuance of such 8-K, the Company represents to the Purchasers that, it shall have publicly disclosed all material,
non-public information delivered to any of the Purchasers by the Company or any of its Subsidiaries, or any of their
respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction
Documents. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the
name of any Purchaser in any filing with the Commission or any regulatory agency or Trading Market, without the prior written
consent of such Purchaser, except: (a) as required by federal securities law and (b) to the extent such disclosure is
required by law or Trading Market regulations, in which case the Company shall provide the Purchasers with prior notice of
such disclosure permitted under this clause (b).


 






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4.7  Shareholder
Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that
any Purchaser is an “Acquiring Person” under any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter
adopted by the Company, or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by
virtue of receiving Securities under the Transaction Documents or under any other agreement between the Company and the
Purchasers.


 


4.8  Non-Public
Information. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction
Documents, the Company covenants and agrees that neither it, nor any other Person acting on its behalf, will provide any
Purchaser or its agents or counsel with any information that the Company believes constitutes material non-public
information, unless prior thereto such Purchaser shall have entered into a written agreement with the Company regarding the
confidentiality and use of such information. The Company understands and confirms that each Purchaser shall be relying on the
foregoing covenant in effecting transactions in securities of the Company.


 


4.9  Use
of Proceeds. The Company shall use the net proceeds hereunder as set forth on Schedule 4.9 attached hereto, and
shall not use such proceeds: (a) for the satisfaction of any portion of the Company’s debt (other than payment of trade
payables in the ordinary course of the Company’s business and prior practices), (b) for the redemption of any Common
Stock or Common Stock Equivalents, (c) for the settlement of any outstanding litigation or (d) in violation of FCPA or OFAC
regulations.


 


4.10  Indemnification
of Purchasers. Subject to the provisions of this Section 4.10, the Company will indemnify and hold each Purchaser and its
directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent
role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser
(within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”)
harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all
judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such
Purchaser Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants
or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against
the Purchaser Parties in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is
not an Affiliate of such Purchaser Party, with respect to any of the transactions contemplated by the Transaction Documents (unless
such action is based upon a breach of such Purchaser Party’s representations, warranties or covenants under the Transaction
Documents or any agreements or understandings such Purchaser Party may have with any such stockholder or any violations by such
Purchaser Party of state or federal securities laws or any conduct by such Purchaser Party which constitutes fraud, gross negligence,
willful misconduct or malfeasance). If any action shall be brought against any Purchaser Party in respect of which indemnity may
be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall
have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any
Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment
thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time
to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material
conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the
Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel. The Company will
not be liable to any Purchaser Party under this Agreement (y) for any settlement by a Purchaser Party effected without the Company’s
prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that
a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties,
covenants or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents. The indemnification
required by this Section 4.10 shall be made by periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or are incurred. The indemnity agreements contained herein shall be in addition to
any cause of action or similar right of any Purchaser Party against the Company or others and any liabilities the Company may
be subject to pursuant to law.


 






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4.11  Reservation
and Listing of Securities.


 


(a)  The
Company shall maintain a reserve of 60 million shares of Common Stock subject to adjustment as provided in Section 5 of the Note
to fulfill its obligations in full under the Transaction Documents.


 


(b)  If,
on any date beginning seventy two (72) hours after the Closing, the number of reserve shares of Common Stock is less than 60 million
shares, then the Board of Directors shall use commercially reasonable efforts to amend the Company’s Certificate of Incorporation
to increase the number of authorized but unissued shares of Common Stock at such time, as soon as possible and in any event not
later than the seventy fifth (75th) day after such date.


 


(c)  The
Company shall, if applicable: (i) in the time and manner required by the principal Trading Market, prepare and file with such
Trading Market an additional shares listing application covering a number of shares of Common Stock at least equal to the Required
Minimum on the date of such application, (ii) take all steps necessary to cause such shares of Common Stock to be approved for
listing or quotation on such Trading Market as soon as possible thereafter, (iii) provide to the Purchasers evidence of such listing
or quotation and (iv) maintain the listing or quotation of such Common Stock on any date at least equal to the Required Minimum
on such date on such Trading Market or another Trading Market.


 


4.12  Other
Notes; Variable Securities. For twelve (12) months from the date of this letter agreement, the Company and each Subsidiary
shall be prohibited from effecting or entering into an agreement to effect any offer or sale of any Securities involving a Variable
Rate Transaction.  “Variable Rate Transaction” means a transaction in which the Company or any Subsidiary (i)
issues or sells any convertible Securities either (A) at a conversion, exercise or exchange rate or other price that is based
upon and/or varies with the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance
of such convertible Securities, or (B) with a conversion, exercise or exchange price that is subject to being reset at some future
date after the initial issuance of such convertible Securities or upon the occurrence of specified or contingent events directly
or indirectly related to the business of the Company or the market for the Common Stock, other than pursuant to a customary “weighted
average” anti-dilution provision or (ii) enters into any agreement (including, without limitation, an equity line of credit
or an “at-the-market” offering) whereby the Company or any Subsidiary may sell Securities at a future determined price
(other than standard and customary “preemptive” or “participation” rights). Each Purchaser shall be entitled
to obtain injunctive relief against the Company and its Subsidiaries to preclude any such issuance without having to plead or
prove irreparable harm or the lack of an adequate remedy at law or post any bond or other security, which remedy shall be in addition
to any right to collect damages. This negative covenant shall not apply to any of the Transaction Documents.


 






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4.13  Equal
Treatment of Purchasers. No consideration (including any modification of any Transaction Document) shall be offered or paid
to any Person to amend or consent to a waiver or modification of any provision of this Agreement unless the same consideration
is also offered to all of the parties to this Agreement. Further, the Company shall not make any payment of principal or interest
on the Notes in amounts which are disproportionate to the respective principal amounts outstanding on the Notes at any applicable
time. For clarification purposes, this provision constitutes a separate right granted to each Purchaser by the Company and negotiated
separately by each Purchaser, and is intended for the Company to treat the Purchasers as a class and shall not in any way be construed
as the Purchasers acting in concert or as a group with respect to the purchase, disposition or voting of Securities or otherwise.


 


4.14  Intentionally
Omitted.


 


4.15  Form
D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Securities as required under Regulation
D and to provide a copy thereof, promptly upon request of any Purchaser. The Company shall take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchasers
at the applicable Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall
provide evidence of such actions promptly upon request of any Purchaser.


 


4.16  Maturity
Date Kicker. If the Company does not repay the Note in full by the six (6) month anniversary of the Closing Date, then the
Company shall issue to the Purchasers up to two hundred fifty thousand (250,000) shares of Common Stock (in aggregate to all Purchasers),
pro rata to the outstanding principal amounts of their respective Notes at the Closing Date as compared to the Purchasers’
aggregate Principal Amount at Closing, within three (3) days after such six (6) month anniversary.


 


4.17  Participation
in Future Financing.


 


(a) From
the date hereof until the date that no principal amount under the Notes remains outstanding, upon any issuance by the Company
or any of its Subsidiaries of Common Stock, Common Stock Equivalents or debt for cash consideration, indebtedness or a combination
thereof (a “Subsequent Financing”), the Purchasers shall, collectively, have the right to participate in the
Subsequent Financing in an amount up to fifty percent (50%) of the Subsequent Financing (the “Participation Maximum”)
on the same terms, conditions and price provided for in the Subsequent Financing.


 






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(b)
(i) At least twelve (12) hours prior to the pricing of the Subsequent Financing if such Subsequent Financing will be a registered
offering pursuant to Form S-1 or, (ii) three (3) days prior to the closing of the Subsequent Financing if such Subsequent Financing
will not be a registered offering pursuant to Form (the “Subsequent Financing Notice Period”), the Company
shall deliver to each Purchaser a written notice of its intention to effect a Subsequent Financing (the “Subsequent Financing
Notice”), which Subsequent Financing Notice shall describe in reasonable detail the proposed terms of such Subsequent
Financing, the Persons as parties to the Subsequent Financing, the amount of proceeds intended to be raised thereunder and the
Person or Persons through or with whom such Subsequent Financing is proposed to be effected, and shall include a term sheet or
similar document relating thereto as an attachment.


 


(c)
Any Purchaser desiring to participate in such Subsequent Financing must provide, before the expiration of the Subsequent Financing
Notice Period, written notice to the Company that such Purchaser is willing to participate in the Subsequent Financing, the amount
of such Purchaser’s participation, and represent and warrant that such Purchaser has such funds ready, willing, and available
for investment on the terms set forth in the Subsequent Financing Notice.


 


(d)
If notifications by the Purchasers of their willingness to participate in the Subsequent Financing (or to cause their designees
to participate) is, in the aggregate, less than the total amount of the Subsequent Financing, then the Company may effect the
remaining portion of such Subsequent Financing on the terms and with the Persons set forth in the Subsequent Financing Notice.


 


(e) 
If the Company receives responses to a Subsequent Financing Notice from Purchasers seeking to purchase more than the aggregate
amount of the Participation Maximum, each such Purchaser shall have the right to purchase its Pro Rata Portion of the Participation
Maximum.  “Pro Rata Portion” means the ratio of (x) the Subscription Amount of Securities purchased by
a Purchaser participating under this Section 4.17 and (y) the sum of the aggregate Subscription Amounts of Securities purchased
by all Purchasers participating under this Section 4.17.


 


(f)
The Company must provide the Purchasers with a second (2nd) Subsequent Financing Notice, and the Purchasers will again
have the right of participation set forth above in this Section 4.17, if the Subsequent Financing subject to the initial Subsequent
Financing Notice is not consummated for any reason on the terms set forth in such Subsequent Financing Notice within thirty (30)
Trading Days after the date of the initial Subsequent Financing Notice.


 






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(g) The
Company and each Purchaser agree that if any Purchaser elects to participate in the Subsequent Financing, the transaction documents
related to the Subsequent Financing shall not include any term or provision whereby such Purchaser shall be required to agree
to any restrictions on trading as to any of the Securities purchased hereunder or be required to consent to any amendment to or
termination of, or grant any waiver, release or the like under or in connection with, this Agreement, without the prior written
consent of such Purchaser.


 


(h) Notwithstanding
anything to the contrary in this Section 4.17 and unless otherwise agreed to by such Purchaser, the Company shall either confirm
in writing to such Purchaser that the transaction with respect to the Subsequent Financing has been abandoned or shall publicly
disclose its intention to issue the securities in the Subsequent Financing, in either case in such a manner such that such Purchaser
will not be in possession of any material, non-public information, by the tenth (10th) Business Day following delivery
of the Subsequent Financing Notice. If by such tenth (10th) Business Day, no public disclosure regarding a transaction
with respect to the Subsequent Financing has been made, and no notice regarding the abandonment of such transaction has been received
by such Purchaser, such transaction shall be deemed to have been abandoned and such Purchaser shall not be deemed to be in possession
of any material, non-public information with respect to the Company or any of its Subsidiaries.


 


(i) Notwithstanding
the foregoing, this Section 4.17 shall not apply in respect of an Exempt Issuance.


 


ARTICLE
V.


MISCELLANEOUS


 


5.1  Termination. 
This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any
effect whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties, if
the Closing has not been consummated on or before July 5, 2018; provided, however, that such termination will
not affect the right of any party to sue for any breach by any other party (or parties).


 


5.2  Entire
Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of
the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral
or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.


 


5.3  Notices.
Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and
shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered
electronic submission at the e-mail address set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New York
City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered
via electronic submission at the e-mail address set forth on the signature pages attached hereto on a day that is not a Trading
Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2nd) Trading Day following the
date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom
such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages
attached hereto.


 






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5.4  Amendments;
Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed,
in the case of an amendment, by the Company and the Purchasers holding at least 67% in interest of the Securities then outstanding
or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought. No waiver of any default
with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future
or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay
or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.


 


5.5  Headings.
The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.


 


5.6  Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of
each Purchaser (other than by merger). Any Purchaser may assign any or all of its rights under this Agreement to any Person to
whom such Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect
to the transferred Securities, by the provisions of this Agreement and the Transaction Documents that apply to the “Purchasers.”


 


5.7  No
Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors
and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as
otherwise set forth herein


 


5.8  Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall
be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a
party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be
commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to
the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication
of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including
with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such
suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered
or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under
this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either
party shall commence an action, suit or proceeding to enforce any provisions of the Transaction Documents, then, in addition to
the obligations of the Company under Section 4.10, the prevailing party in such action, suit or proceeding shall be reimbursed
by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation
and prosecution of such action or proceeding.


 






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5.9  Survival.
The representations and warranties contained herein shall survive the Closings and the delivery of the Securities.


 


5.10  Execution.
This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each party and delivered to each other party, it being
understood that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission
or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of
the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf”
signature page were an original thereof.


 


5.11  Severability.
If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain
in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that
they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.


 


5.12  Rescission
and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of)
any of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction
Document and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser
may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand
or election in whole or in part without prejudice to its future actions and rights; provided, however, that in the
case of a rescission of a conversion of a Note or exercise of a Warrant, the applicable Purchaser shall be required to return
any shares of Common Stock subject to any such rescinded conversion or exercise notice concurrently with the return to such Purchaser
of the aggregate exercise price paid to the Company for such shares and the restoration of such Purchaser’s right to acquire
such shares pursuant to such Purchaser’s Warrant (including, issuance of a replacement warrant certificate evidencing such
restored right).


 


5.13  Replacement
of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation),
or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory
to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances
shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement
Securities.


 






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5.14  Remedies.
In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of
the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that
monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the
Transaction Documents and hereby agree to waive and not to assert in any action for specific performance of any such obligation
the defense that a remedy at law would be adequate.


 


5.15  Payment
Set Aside. To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document
or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or
exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from,
disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person
under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action),
then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.


 


5.16  Usury.
To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever claim,
and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at
any time hereafter in force, in connection with any claim, action or proceeding that may be brought by any Purchaser in order
to enforce any right or remedy under any Transaction Document. Notwithstanding any provision to the contrary contained in any
Transaction Document, it is expressly agreed and provided that the total liability of the Company under the Transaction Documents
for payments in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum
Rate”), and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of
them, when aggregated with any other sums in the nature of interest that the Company may be obligated to pay under the Transaction
Documents exceed such Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by law and applicable to
the Transaction Documents is increased or decreased by statute or any official governmental action subsequent to the date hereof,
the new maximum contract rate of interest allowed by law will be the Maximum Rate applicable to the Transaction Documents from
the effective date thereof forward, unless such application is precluded by applicable law. If under any circumstances whatsoever,
interest in excess of the Maximum Rate is paid by the Company to any Purchaser with respect to indebtedness evidenced by the Transaction
Documents, such excess shall be applied by such Purchaser to the unpaid principal balance of any such indebtedness or be refunded
to the Company, the manner of handling such excess to be at such Purchaser’s election.


 






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5.17  Independent
Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction Document are several
and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance
or non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any
other Transaction Document, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the
Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers
are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction
Documents. Each Purchaser shall be entitled to independently protect and enforce its rights, including, without limitation, the
rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser
to be joined as an additional party in any proceeding for such purpose. Each Purchaser has been represented by its own separate
legal counsel in its review and negotiation of the Transaction Documents. The Company has elected to provide all Purchasers with
the same terms and Transaction Documents for the convenience of the Company and not because it was required or requested to do
so by any of the Purchasers.


 


5.18  Liquidated
Damages. The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction
Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other
amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages
or other amounts are due and payable shall have been canceled.


 


5.19Saturdays,
Sundays, Holidays, etc.If the last or appointed day for the taking of any action or the expiration of any right required
or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding
Business Day.


 


5.20  Construction.
The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition, each and
every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse
and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after
the date of this Agreement.


 


5.21  WAIVER
OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES
EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY
AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY. 


 


(Signature
Pages Follow)


 






    	 	- 32 -	 



     


    




 





IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.


 





	Massroots, Inc.	 	Address for Notice:
	 	 	 	 
	By:	 	 	Email: isaac@massroots.com
	 	Name: Isaac Dietrich	 	 
	 	Title: Chief Executive Officer	 	 
	 	 	 	 
	With a copy to (which shall not constitute notice):	 	 
	 	 	 
	Sheppard Mullin Richter & Hampton LLP	 	 
	30 Rockefeller Plaza, 39th Floor	 	 
	New York, New York 10112	 	 
	Attn: Andrea Cataneo, Esq.	 	 
	Email: acataneo@sheppardmullin.com	 	 







 




     


     


    

 


[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK


SIGNATURE
PAGE FOR PURCHASER FOLLOWS]


 


[PURCHASER
SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT]


 


IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.





 


Name
of Purchaser: _____________________________________________________________


 


Signature
of Authorized Signatory of Purchaser: _______________________________________


 


Name
of Authorized Signatory: ____________________________________________________


 


Title
of Authorized Signatory: _____________________________________________________


 


Email
Address of Authorized Signatory: _____________________________________________


 


Facsimile
Number of Authorized Signatory: __________________________________________


 


Address
for Notice to Purchaser:





 


Address
for Delivery of Securities to Purchaser (if not same as address for notice):





 


Subscription
Amount: _____________


 


Principal
Amount: _____________


 


Underlying
Shares: _________________





 


EIN
Number: _______________________





 


[SIGNATURE
PAGES CONTINUE]


 




     


     


    

 


Annex
A 


 


CLOSING
STATEMENT


 


Pursuant
to the attached Securities Purchase Agreement, dated as of the date hereto, the purchasers shall purchase Notes and Warrants from
MassRoots, Inc. (the “Company”). All funds will be wired into an account maintained by the Company. All funds
will be disbursed in accordance with this Closing Statement.


 


Disbursement
Date:_____________________





 





 



 


	I.  
        PURCHASE PRICE

         
	 
	 	Gross
    Proceeds to be Received 	$
	 	 
	II.  DISBURSEMENTS

         
	 
	 	 	$
	 	 	$
	 	 	$
	 	 	$
	 	 	$
	 	 
	Total
    Amount Disbursed:	$






 


	WIRE INSTRUCTIONS:	 
	 	 
	
        To: _____________________________________

        

         

        Duly executed this ____________ day of
        __________, 2018:

         

        MassRoots, Inc.

        

         

        By: ___________________

        Name: Isaac Dietrich

        Title: Chief Executive Officer

        
	 







 








    

     

    

 





SCHEDULE 3.1(a)


Subsidiaries


		1.	DDDigtal, Inc.



		2.	Odava, Inc.



		3.	MassRoots Blockchain Technologies, Inc.



 






    

     

    

 


SCHEDULE 3.1(g)


Capitalization


 


We are authorized to issue up to
500,000,000 shares of common stock, of which 155,787,534 shares of common stock are issued and outstanding as of the date hereof.
In addition, we are authorized to issue up to 10,000,000 shares of preferred stock, none of which are outstanding as of the date
hereof.


 


As of the date hereof and excluding
consideration of vesting provisions, an aggregate of 15,371,765 shares of common stock are issuable upon the exercise of options
granted under plans to certain employees and directors and 34,626,339 shares of common stock are issuable upon the exercise of
warrants outstanding.


 


Beneficial ownership of securities
of Affiliates of the Company is as follows:


 


	 	 	Number of
	 	 	Shares
	 	 	Beneficially
	 	 	Owned
	 	 	 	 
	Directors and Named Executive Officers	 	 	 	 
	Isaac Dietrich	 	 	17,738,831	(1)
	Charles R. Blum	 	 	500,000	(2)
	Cecil Kyte	 	 	1,500,000	(3)
	Graham Farrar	 	 	500,000	(4)
	Jesus Quintero	 	 	320,075	 
	All directors and named executive officers as a group (5 persons)	 	 	20,558,906	 



 


		(1)	Includes 17,738,831 shares of common stock. Excludes warrants to purchase up
to 85,000 shares of common stock. The forgoing warrants contains an ownership limitation such that the holder may not convert any
of such securities to the extent that such conversion would result in the holder’s beneficial ownership being in excess of
4.99% of the Company’s issued and outstanding common stock together with all shares owned by the holder and its affiliates.



 


		(2)	Includes (i) 250,000 shares of common stock and (ii) an option to purchase up to 250,000 shares of common stock.



 


		(3)	Includes (i) 750,000 shares of common stock and (ii) an option to purchase up to 750,000 shares of common stock.



 


		(4)	Includes (i) 250,000 shares of common stock and (ii) an option to purchase up to 250,000 shares of common stock.







    

     

    

 


SCHEDULE 3.1(i)


Material Changes; Undisclosed Events, Liabilities
or Developments


 


None.


 



    

     

    




 


SCHEDULE 3.1(q)


Certain Fees


 


None.


 






    

     

    

  


SCHEDULE 3.1(t)


Registration Rights


 


On January 31, 2018, the Company entered into
separate securities purchase agreements with certain accredited investors pursuant to which it sold an aggregate of $2,740,000
of units. Each unit consists of one share of common stock and a warrant to purchase one share of common stock.  Pursuant to
the terms of the securities purchase agreement, the Company agreed to file a registration statement to register the resale of the
units (and the securities included therein) within 14 days of the closing date of the offering and to cause such registration statement
to be declared effective by the SEC within 45 days of the closing date of the offering. As of the date hereof, the registration
statement has not yet been declared effective by the SEC.


 






    

     

    

 


SCHEDULE 3.1(cc)


Accountants


 


RBSM LLP


 



    

     

    




 


SCHEDULE 3.1(ff)

Seniority


 


Not applicable.


 






    

     

    

 


SCHEDULE 4.9


Use of Proceeds


 


 


General corporate purposes and advertising the MassRoots platform/business
portal.